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Flooring InstallationResidential Flooring

Home Building at Fastest Pace in Areas with Shortest Commute Times

NAHB
June 1, 2021

Home building across the nation expanded the fastest in places with the shortest commute times, according to the quarterly National Association of Home Builders (NAHB) Home Building Geography Index (HBGI). The HBGI also shows the suburban shift in new home construction to low density, low cost markets stemming largely from the COVID-19 pandemic and first reported in the second quarter of 2020 continued into 2021.

"The first quarter HBGI indicates that home building not only continued to overperform in lower cost markets like suburbs and exurbs, but also expanded the most rapidly for single-family and multifamily construction in areas with the shortest commutes," said NAHB chief economist Robert Dietz. "As workplaces increasingly adopt hybrid work models for roughly 30-40 percent of the American workforce, renters and buyers will have increased market power to minimize travel times and reduce both housing and transportation cost burdens."

With a nationwide mean commuting time of 26 minutes, the latest HBGI shows that single-family home building was the highest in the top two (longest) commute quintiles, with a combined market share of 63.6 percent. Growth in the first quarter of 2021, however, was strongest in the bottom quintile (shortest commutes), with four-quarter moving average year-over-year growth rates of 22.2 percent.

In other words, while longer-commute areas have a much greater market share in single-family home building, the single-family construction growth rates in the first quarter of 2021 were strongest in the areas with the shortest commuting times.

Meanwhile, the counties with the longest commute times significantly lost market share for multifamily construction, decreasing from 40 percent to 35.6 percent over the past year. Areas with the shortest commute times posted the strongest apartment construction growth rate of 24.2 percent.

Continuing a trend from the beginning of last year, the HBGI indicates that low density, low cost markets continued to outperform other regional geographies with respect to home construction at the start of 2021.

"With the shift to telework brought on by the COVID-19 pandemic, housing demand continued to show the strongest gains in lower density markets in the first quarter as people have flexibility to live further out and even outside some metro areas," said NAHB chairman Chuck Fowke, a custom home builder.  "Given the regulatory burdens and lack of lots in higher density, higher cost markets, builders are better able to meet demand in suburban, exurban and rural areas because of the lower cost to build."

Regarding the suburban shift for home building, the first quarter HBGI found that:

  • For single-family home building, the market share for large metro core counties declined from 18 percent in the first quarter of 2020 to 16.9 percent in the first quarter of 2021.
  • Outlying counties (outer suburbs) of large and small metros expanded from 17.2 percent to 17.9 percent.Outer suburbs of small metros posted the strongest growth rates for single-family construction over the last four quarters (21.7 percent) while large metro core areas exhibited the slowest growth rate (9.7 percent).
  • For multifamily, the impact was even more significant; the combined market share for large core and suburban counties declined from 67 percent to 63.4 percent between the first quarter of 2020 and the first quarter of 2021.
  • Over the same period, small metros (core and suburbs) saw gains for apartment construction from 24.7 percent to 27.1 percent as multifamily development moved to lower density areas.

Learn more at nahb.org.

KEYWORDS: construction Coronavirus housing market market trends National Association of Home Builders (NAHB)

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